Debt Consolidation Help - Is Debt Consolidation Right for You? Part I

by Freddie Johnson - Date: 2007-04-19 - Word Count: 307 Share This!

Seeking debt consolidation help is one of the options available to you when you have too much debt and owe too many creditors. So how do you know if debt consolidation is the right option for you and your debt situation?

When a debt consolidation program is put together in the right way, it can help you pay less money and get out of debt faster than you would have done if you hadn't consolidated your debt.

Keep in mind that debt consolidation is not the be all end all of getting out of debt but it can play a big role in eventually becoming debt free. This is especially true if you take your debt consolidation program and combine it with other financial management and debt management tips and techniques to get out of debt and stay out of debt.

So what exactly is debt consolidation? Debt consolidation involves taking on new debt to pay off your existing debt immediately. Let's say you owe fourteen different creditors and you are making monthly payments to all fourteen individually. When you consolidate your debt, you take on new debt that you use to pay off all your other debts. You then make one monthly payment on your new debt. A big part of good debt consolidation is that you get yourself a much lower interest rate on your new debt than you had on all your other debts.

For example, let's say you have a lot of credit card debt on four different credit cards. And the interest rates on these cards are 14%, 17%, 19% and 21.9%. You get a new loan with an interest rate of 7% and use the money to completely pay off your credit card debt. Now you have one debt at a much lower 7% interest. You can also improve your credit rating in this manner.

Related Tags: credit card debt, debt consolidation, debt management, debt relief, debt solutions, debt tips

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